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China Surveillance Giant Hikvision Warns of Losses After U.S. Curbs

Hangzhou Hikvision Digital Technology Co., the the world’s largest video surveillance company, warned it may lose customers in overseas markets because of its U.S. blacklisting.

The Chinese company on Friday reported profit in line with estimate, and executives said that the company was large enough to withstand U.S. sanctions and develop its own technology in the longer term. Its own market remains a rich source of revenue even though the U.S. business is also shrinking, a trend that may persist for a while, Huang Fanghong, a Hikvision senior vice president, said on an earnings call on Saturday.

Earler this month, the The Trump administration added Hikvision to the so-called Entity List, which prevents American firms from supplying it with components and software.

The seller of video cameras used around the world in surveillance was accused of involvement in human rights violations against Muslim minorities in the far-western region of Xinjiang.

Hikvision executives say they had anticipated the action and stockpiled enough key parts to keep operations going for some time. Most of Hikvision’s American suppliers are continuing to do business with it, while abiding by export regulations and without the need for special licenses, according to Huang.

Hikvision has been switching to Chinese-made components in recent years but still relies on the likes of Intel, ON Semiconductor and Texas Instruments.

Hikvision reported Friday that net income grew 17% to 3.81 billion yuan ($538 million) in the September quarter, while revenue grew 23%. The company forecast growth of 5% to 20% in net income this year.